1.1:
Preface: A Fast-Forward Canadian Green
Economy Plan for Catching up Entailing Learning from Those More Advanced than
Canada and Canadian Past Experiences

While the Paris COP21
agreement constitutes progress on a global scale, it merely requires countries
to set non legally binding targets and review progress on these targets every
five years. That said, the Government of
Canada implied, at COP21, that it will be enhancing Canada's targets from the
levels proposed by the previous government.

Notwithstanding their respective COP21 "commitments,"
the intensity of efforts, or roadmaps, for nations to achieve their respective
COP21 targets, are at the discretion of the participating nations. The Roadmap
for Canada presented in this document, places 98% of the emphasis on options on " how to" make a timely Canadian transition
to a green economy paradigm.

Against this backdrop,
this
discussion paper on a Canadian transition to a green economy offers government
elected representatives and employees; environmental organizations; research
entities; clean tech firms; and other key stakeholders, comprehensive choices
of paths for a fast-forward catch up with Canada's competitors. This highly detailed Roadmap is based on 1)
models from around the globe, adapted and improved upon for "Made in
Canada" applications and 2) my own experiences as a former Government of
Canada employee, regarding sustainable development policies, legislation,
programs, projects, etc. The latter consideration provided insights on how
to best to adapt measures from elsewhere to suit Canada, as well as insights on lessons to be learned
from past Government of Canada climate change action plans -- what has worked
and not worked, what needs improvement, organizational structures,
federal-provincial relations, etc.

As the above-mentioned status of
Canada in the global green economy suggests, developing a comprehensive plan to
close the green economy gap with Canada's competitors is a tall order.

Not only are the job numbers mind-boggling, but
the return on government investments for job creation are equally
significant. There are 6 to 8 times more jobs per government
investment unitfor
investments in the green economy compared with that of the traditional resource economy.

Of course, it is the staggering rate at which
newly installed renewables capacity is being added around the globe that explains
the awesome employment growth in the domain.

According to theInternational Energy Agency(IEA), in 2015, an astounding 90% of all global
electrical power capacity added was attributable to renewables and the
production of emissions have remained in a plateau since 2013. What's
especially notable here is that this has happened during a period of economic
growth. In fact, since 2000 a total of
21 nations -- not including Canada --have reduced their emissions while
experiencing economic growth, demonstrating the decoupling of the two is possible.

In 2015, China’s total installed capacity for wind and solar farms stood at 145 GW and 43 GW respectively. An incredible total of 30.5 GW of new wind power capacity had been added in 2015. The solar PV sector saw 15 GW added in 2015, a world record! For 2020, the projected installed capacities for wind and solar farms chalk up to 200 GW each!

Turning to the subject of impacts of clean
energy tech growth on emissions, China,
the world's largest energy consumer, with its growing massive investments in renewables,
is single-handedly largely responsible for the aforementioned global plateau in
GHG emissions. In 2015, China's coal
consumption slumped for the second year in a row, a 3.7% decline in 2015 and 2.9% in
2014.

And while the preceding
green economy progress has not yet been paralleled in the transportation sector
-- currently nearly 100% dependent on petroleum -- policies in place in China, California and Norway indicate that the
transition to significantly less fossil fuel dependent vehicles is imminent.

Not to be outdone, California has put in place an
impressive package of policies to reach its target of 1.5M zero emission vehicles (ZEVs) on
the it's roads by 2025; including requirements that 1) ZEVs represent
15.4% of vehicles sold by each manufacture by 2025; 2) there be enough charging stations to
support 1M ZEVs statewide by 2020; 3) 10% of the state's light duty vehicle
purchases be electric, as of 2015, with the percentage incrementally increasing
to 25% by 2025 and 4) new and recent buildings be equipped with the
infrastructure in place to receive charging stations.

Clearly the actions described above will lead
to a substantial penetration rates of electric vehicles in the medium term that
will be devastating for the demand for oil on global markets. Such are the conclusions of independent
energy advisors Salman Ghouri and Andreas de Vries. Their
research of low, medium and high electric vehicle market penetration scenarios
indicated that even the low penetration scenario, in the medium term, would
have a major impact on crude oil demand bringing about an imbalance between
supply and demand.

Linking all the aforementioned factors in this
introductory piece, notably 1)the increasingly aggressive actions on climate
change by nations around the globe and 2) the sharply declining costs of clean
energy and clean transportation technologies,
it is becoming evident that the flattening of demand for fossil fuels is
not cyclical, as some traditional economists would want us to believe, but part
of a growing trend accompanying a rapid migration to a green economy.

What are the ramifications of the preceding
global developments in terms of changes towards a new economic paradigm? Well, the answers are threefold.

First, even the BP Chief Economist, Spencer Dale; UBS, the world's largest bank; and Mark Carney, Governor of the Bank of England, have concluded
that, with the increasingly aggressive government actions on climate, the
fossil fuel glory era is nearing its end, meaning
much of the world's proven reserves will become stranded assets, or
liabilities.

Second, all of the above factors suggest that
the Energy East and Kinder Morgan pipelines may be economically redundant. Especially
noteworthy, the economic viability of Energy East as a means of transport for
tar sands derived oil has recently been brought into question with the
revelation that 30% of the Energy East capacity is slated for transporting
North Dakota shale oil through Canada to be re-exported to the US East Coast.

Third, to
close the green economy gap, Canada must learn from 1) the models of nations
more advanced than Canada and 2) past Canadian experiences on actions on
climate change. And most critical, if we
are to be serious about changing the economic/energy paradigm, we have got to
move beyond mantras of "magic/tired old solutions" to a comprehensive economy-wide game plan covering all the main
bases. The idea here is to have the very
extensive sets of Roadmap components, that collectively, and in a synergistic fashion,
foster the desired transition.

The third
consideration entails reviews leading to solutions that 1) are broken down,
policy-by-policy, program-by-program, etc.; 2) include organizational mandates;
3) specify sources to finance new measures and 4) back up all of the above
with proposals on legislation and fiscal measures, incentives/disincentives,
etc. This is what Sections 2 to 14 are
all about, presented by way of options for government and other stakeholders to
choose from, or cherry pick, as per their respective preferences.

Further on the matter
of financing, the order of magnitude of the potential for new sources of
financing the transition to green economics, including the diversification of
the fossil fuel sector, could be enormous in light of the International
Monetary Fund estimate that in 2015 the annual subsidy for petroleum, natural
gas and coal in Canada stood at $46B (USD).
More on this in sub-section 2.1.

1.2:
Setting Targets and Making up for Lost Time

While the lion's share
of the guidelines in this document are focused on "HOW TO" achieve a Canadian migration to a green economy, much importance should also be attributed
to targets for several reasons.

Some of these reasons
are: 1) to follow through on the Paris
COP21, where the Government of Canada expressed interest in more ambitious GHG
reduction commitments, in line with the COP21 objective of limiting the aggregate
global rise in temperatures to 1.5 degrees centigrade ; 2) to offer Canada a means to assure it is on track for closing its
green economy gap when compared with other nations currently more advanced
on GHG reductions -- in particular compared to the EU nations, with their ambitious
targets and levels of efforts contributing to high success rates on their
targets; and 3) to compare Canada with
the incredible pace of green economy advancements in China, a pace unequaled
anywhere in the world. As indicated in
sub-section 1.1, nearly 100% of China's new electricity installations in 2015
were represented by renewables, China is the world leader in electric vehicle
sales and manufacturing and China's coal consumption was down for the second year in a row in that
year.

Expanding on item #2
above, Europe is a good place to begin both for inspiration and international
comparisons on closing Canada's green economy gap.

Of course the EU is
coming from a big head start, that includes the myriad of complementary polices
by EU member nations in support of a migration to a green economy. -- Indeed, this is why much of the EU wide
and EU nation-specific policies on climate are integrated in this document in
the form of applications for a Canadian context.

But how can Canada
catch up? On one hand, it would be nice
if Canada could match the EU with a reduction of GHGs by 20% over 1990 levels
by 2020. But this may not be realistic
in light of the fact that Canada's GHG's have spiked up under the reigns of
previous governments for several decades.
This includes the period when Canada was committed to Kyoto Protocol
targets.

Accordingly, one
option would to set a target for a 20% reduction by 2022, leaving wiggle room
to initiate the catching up with the EU.
However, this wiggle room - 20% by 2022 -would come with the caveat to
the effect that there would be a 2025 target for a 25% reduction of GHGs.

In this way, Canada
would have some flexibility in starting from behind our competitors while putting
the right pieces in place to develop a green economy momentum to match, or come
close to matching, the EU, with a 35% to 40% GHG reduction target for 2030.

1.3:
Collaboration with the Provinces and Territories on Targets and Initiatives

On the matter of
federal collaboration , the Government of Canada could take a page from the
German party, SPD (social democrats), specifically from their 2013 election
campaign, calling for an energy Council that would oversee the distribution of
responsibilities between the federal government and the German states, the
Bundesländer.

Specifically, it is
recommended that the aforementioned GHG national targets outlined in sub-section
1.2 be a starting point, from which a newly created Federal-Provincial Climate
Council of Energy and Environment Ministers (or some other new entity of the
government's choosing, as appropriate) would
thrash out 1) provincial/territorial GHG reduction targets and 2) national and
provincial/territorial targets on
renewables, energy efficiency , clean transportation, low carbon buildings and
other considerations.

The Climate Council, or otherwise named entity, would
also assure national and regional policy synergies and oversight for optimal
effectiveness plus advise on related matters concerning best practices pertaining
to policies on clean energy, energy storage, low carbon buildings and clean
transportation and so on. (See sub-sections 1.5; 1.7; 3.1; 4.4; 5.1; 5.2; 6.2;
9.1; 9.2; 10.1; 10.2; 10.3; 10.4 and 12.3).
These measures would follow in the footsteps of the EU model to assure
that the 28 member states do not stray from agreed targets and the policy
synergies necessary to achieve the goals are put in place.

Accordingly, the Climate Council -- or otherwise named entity
-- would issue a report every two years that covers recommendations on
modifications to existing policies and new initiatives.

1.4:
Price on Carbon: Fixed Price for Carbon and Cap & Trade are Not Magical
Solutions

With different provinces having different
choices on the path to be taken, cap and trade versus a fixed price on carbon
versus no price on carbon at all etc., the outcomes of Government of Canada
negotiations with the provinces would primarily
be political decisions reflecting the art of the possible and covering
permutations and combinations of "solutions." And of course these political decisions should
be consistent with the political decisions on targets outlined in sub-sections
1.2 and 1.3.

Political considerations aside, it needs to be
stressed that a price on carbon is only helpful when combined with other
measures to advance a green economy. On
this question, it is important to keep in mind that Europe has the most longstanding
cap and trade scheme but it is their extensive, ever expanding and increasingly aggressive palettes
of the other types of climate initiatives -- measures which have been largely integrated
into this Roadmap -- that have been the keys to 1) the EU doing better than
their Kyoto objectives and 2) a projection that the EU will outperform it's 2020 GHG reductions goals. In effect, the EU 15 which bore the burden
for the 2012 Kyoto target of an 8% GHG
reduction relative to 1990 levels achieved a 11.7% reduction and the 2020 objective of a 20% decline in GHG
is predicted to be outclassed with a
24% reduction. By
contrast, in July 2013, the EU postponed the auctioning of 900M
carbon credits from its
carbon markets until 2019-20 due to the ineffectiveness of the price on carbon
and an associated oversupply. Refer to
sub-section 2.6 for more details on this.

And it is particularly questionable what impact
a price on carbon would have when oil prices are low. And they may remain low for a long time to
come with the advent of rapidly expanding markets for clean technologies further
contributing to a flattening of demand for fossil fuels! (see sub-section 1.1)

Refer to the sub-section 2.6 regarding the use
of revenues streams from a price on carbon.

On the other hand, a serious effort to
significantly reduce or ultimately eliminate the $46M/year USD fossil fuel
subsidies, including fiscal measures to diversify the fossil fuel sector
itself, could go a long way to financing the migration to a green economy with
hopefully less Canadian East-West tensions pertaining to a price on carbon.
(See sub-sections 2.1 and 2.2)

1.5:
International Community Efforts

Lastly, the Government of Canada would become a
constructive contributor to 1) the establishment of fair global,
country-specific and region-specific targets within the UN Framework Convention
on Climate Change and 2) the recommendations of the UN Intergovernmental Panel
on Climate Change.

The financing of the migration to a green
economy will be derived from many sources.

2.1:
Re-allocations -- Subsidies and Carbon Price Revenues

According to the International Monetary Fund (IMF), the projected 2015 global level of
subsidies in US dollars for petroleum, natural gas and coal, is $5.3T for the
year , when indirect costs associated with health and climate change are
factored in. In Canada, the IMF annual
fossil subsidy figure works out to an incredible $46B/year and $1283/capita(USD). Forget
equalization payments, this is a bigger issue, one for which all parts of
Canada are contributing -- to the problem!

The flip side of the coin is that the European Wind Energy Association has suggested that the wind sector could live
without subsidies, in the event that fossil fuel subsidies were to be
eliminated.

It is clear that the time is ripe to stop
subsidizing the problem, which in turn, could free up huge amounts of funds for
investing in clean tech solutions. This
would be in keeping with the new Government of Canada pledge at COP21 to end fossil fuel subsidies , thereby
permitting a shift of the "savings"
stemming from a reduction of fossil fuel subsidies over to clean
technologies. Here, clean technologies
should not only include renewables, but also all technologies that are integral
parts of a green economy, such as clean transportation, low carbon buildings,
pollution abatement, emission reduction, energy storage, waste to energy
technologies, etc.

However, the key determinant of a successful
shift of federal subsidies, would be the order of magnitude of the reduction of
fossil fuel subsidies. Modest symbolic
reductions in the annual $46B (USD) in fossil fuel subsidies would constitute
"greenwashing."

The Prime Minister of Sweden, Stefan Löfven,
seems to have grasped this latter point when he declared “History will prove fossil fuel to
be a dead end. Sweden
will be amongst the first fossil free welfare nations of the world. And
eliminating fossil fuel subsidies is an important step on this path.”

The other shifting of resources formula is that
of allocating government carbon price revenues to the Canadian migration to a
green economy. In this way, the public
sector could both provide economic signals to reduce GHGs while simultaneously financing it's green economy initiatives. BUT, when the price of fossil fuels are low,
as is currently the case, coupled with the collapse of the Big Oil business
model (see sub-section 1.1), the government revenue streams from a carbon price
would represent the majority of benefits applied to the green economy.

Also, refer to sub-section 2.6
regarding the allocation of 2% of these revenues for green projects in
developing countries.

2.2:
Diversification of the Canadian Fossil Fuel Sector

Consistent with the Alberta government's
interest in economic and energy diversification, a shift of some of the $46B/year
currently directed towards fossil subsidies to investments in the high job
creation and growth green economy (see sub-section 2.1), could include new
fiscal structures that encourage the fossil fuel enterprises to become highly diversified
energy companies. The idea would be that
of significantly increased investments in clean energy/clean technologies, expressed
as a percentage of total company-specific investments. These
measures would include support for the training of fossil fuel workers to
participate in green jobs stemming from the aforementioned diversification.
(see sub-section 3.1)

By supporting energy diversification of the
fossil fuel sector, the Government of Canada would be doing the fossil fuel
industry, Western Canada and Canada at-large, a great service. As outlined in sub-section 1.1, 1) the
collapse of the Big Oil business model and 2) the perspectives of global
economy leaders -- including UBS, the BP Chief Economist and Mark Carney,
Governor of the Bank of England -- suggest that we are at the precipice of a global
transition to a new global economic paradigm, green economics. This may be described as an equivalent to the
industrial revolution and it's only a
few years away from now.

Thus, with the right economic signals from the
Government of Canada, the large financial resources of the fossil fuel sectors,
could not only be transformed into improved investments opportunities in
Western Canada via a shift to more diversified, healthier and less vulnerable
green economy, but also could create a precedent setting path for Big Oil and
other fossil sectors to offer new business opportunities in the rest of
Canada.

No longer would these former traditional energy
sector firms be tied to markets for resource products in very specific regions
of Canada. Rather, they would have a newfound
flexibility associated with always having some strong cards by way of more reliable
corporate-wide revenues. This could
support maintaining corporate-specific levels of investment while providing a
small margin of manoeuvre for transferring employees and re-assigning
suppliers, as appropriate.

Diversification models for reference purposes include
1) Norway's Statoil which recently approved low carbon/renewable technologies
as one of its 3 principal thrusts; has set up a new renewables division; and
created Statoil Energy Ventures to invest in clean tech start-ups and 2) Denmark's
Dong Energy, 60% owned by the Danish Pension Fund, which
plans to shift from around 85% of its investments in fossil fuels and 15% in
clean energy to a reversed ratio by 2040. -- Dong is the world's largest
investor in offshore wind.

2.3:
The Issuing of Green Bonds and Other Dedicated Financing Mechanisms

The Government of Canada could join the global
movement on the issuing of green bonds, projected to reach up to $100B (USD) in 2015. Whether
these bonds should be issued by the Government of Canada or by the Business
Development Bank of Canada (BDC) -- as per the examples of national
development banks in
Germany (kfw), Europe (The European Investment Bank) France (Agence Française
de Développement) and the Netherlands (NWB) -- should be considered
subsequent to the review of sub-section 2.4, on BDC role options.

While the above examples pertain to major
investment portfolios, note that in some instances, bonds are issued for local
community participation in small projects. (see sub-section 5.5)

With regard to private banks, the greater are
the business opportunities created by
government action on a green economy, the greater are the incentives for
private banks to follow suit by issuing their own green bonds. The UK banks, Barclay's and HSBC are cases in point with 1) the former
having committed $1.5B (USD) in green bonds for 2016, the second year in a row
and 2) the latter (HSBC) having underwritten $1.5B in green bonds by Fall 2015.

Lastly, another form of green investment
portfolios is that of corporations issuing green bonds to support the greening
of their enterprise -- everything from recycling, material recovery and re-use;
improving the energy efficiency and lowering the environmental footprint of their buildings; corporate renewable energy
projects; etc Such is the case of Apple
which issued $1.5B of green bonds in February 2016.

2.4:
The Role of the Business Development Bank of Canada and the Leveraging of
Private Sector Financing

Concerning the Caisse, it recently
acquired 25% equity in the London Array, presently the world's largest offshore wind
farm project, 630 MW, off the UK coast of Kent and Essex.

Another source for BDC revenues to finance it's
clean tech portfolio could be green bonds, either issued by the BDC or the
Government of Canada, as per sub-section
2.3

To assure Canada retains optimal benefits
stemming from the BDC clean technology portfolio, while concurrently
recognizing the advantages of combining Canadian capabilities with those of the
of potential foreign partners -- for a project to be eligible a project for the
aforementioned BDC support -- a project could need to represent 50% Canadian
content. Under this model, Canadian
ownership would be considered as an advantage but not a condition for project
approval. This is less demanding than
the aforementioned Brazil's Banco Nacional
model which requires 60% local content for windpower projects and 56% for solar
projects while also
specifying that certain key technology components be manufactured in Brazil.
(see sub-section 5.4)

Another factor favouring domestic content
criteria is the phenomenon to the effect that going green sometimes means more
outsourcing by manufacturers, hence providing a basis for government to expand
local content requirements to better reflect potentials for the participation
of Canadian suppliers. (More on this in
sub-section 6.2)

As for opportunities to classify Canadian
content criteria under the category of regional development, this would have to
be reviewed in light of international trade agreements and WTO considerations. Federal regional development organizations
and provincial organizations that enjoy a trade agreement exempt status, such
as Hydro-Québec, could be the vehicles for safeguarding local content criteria.

In parallel, the BDC and/or the EDC could join
the International Green Bank Network, created in December 2015, and fostered by the
OECD, regarding investments in global
clean technology markets.

2.5:
The Role of Export Development Canada

Export Development Canada (EDC) would expand
it's clean tech bonds portfolio in collaboration with the Ministries of Foreign
Affairs and International Trade, and possibly other government organizations. This expansion of the mandate would offer
advantageous support for the participation of Canadian clean technology firms
in projects in developing countries,
subject to a 30% Canadian content requirement, much like the US
Export-Import Bank.

With respect to foreign-owned manufacturing
facilities in Canada, support for exports could be linked to the upside to
local content rules by way of BDC support for Canadian manufacturing
facilities, (see sub-sections 1.5; 2.4; 3;
5.1; 10.4; and 12.2)

Sources of financing for the EDC expanded role
could comprise of a fixed percentage of carbon price revenues, as per sub-section
1.5, as well as sources identified in preceding sub-sections 2.1; and 2.3.

The aforementioned mandates could be combined
for a program co-managed by the BDC and EDC.

2.6:
Revenues from Putting a Price on Carbon and Federal-Provincial Collaboration

Putting aside the matter of a fixed price on
carbon versus cap & trade, the Government of Canada focus on carbon credit revenue schemes could
be along the following lines in collaboration with the provinces and
territories:

Create a
mechanism for carbon price reviews every two years to:

assure market effectiveness in light of declining prices of clean techs and market impacts in the event of prolonged low prices for fossil fuels;

The reviews described above would be
synchronized with the every two years reviews of the
Federal/provincial/territorial Climate Council
on targets and policy synergies (see sub-section 1.3). For the largest emitting sectors, the merits of
offering free carbon credits for specified base levels of emissions could be
assessed.

Should the Government of Canada wish to
dedicate some of carbon price revenue to support its commitments to developing
countries, among the options it could consider are:

Allocating
2% of carbon credit/price revenues to help developing countries re GHG
reductions and climate adaptation, with the possibility of an expanded role of
Export Development Canadathat
could include Canadian content stipulations of around 30%, as per the model of the US Export-Import Bank in sub-section 2.5;

Using the
above-mentioned 2% allocation to match -- or independent of the 2% allocation,
and match -- non-government donations to a Canadian registered/certified clean
tech charity for developing countries; (see sub-section 2.5); and

Yet other sources of financing could 1) come
from non-compliance penalties pertaining to Canada's environmental legislation;
2) be derived from the raising of corporate taxes to the level of the G7 average
to allow the Government of Canada to tap into some of the estimated $630B
currently lying dormant in corporate liquidity; and 3) stem from fiscal and
program (cost sharing) measures introduced by the Government of Canada to
encourage private investors to increase investments in clean technologies in
collaboration with, or independent of, federal government initiatives.

____________________________________________________________________

Part 3: Clean Technology Manufacturing and the Greening of Large Industrial Emitters

3.1
Support Options for Clean Technology Manufacturing

In support of clean technology manufacturing, combinations
of options for grants, tax credits, loan guarantees, low interest loans and job
training packages would be reviewed.

As appropriate, priority for job training will go for those
affected by the decline of in the fossil fuel sectors. (See sub-section 2.2)

Regarding product development and pre-commercialisation
demonstrations, refer to Section 4 on technological innovation. BDC and EDC support are additional options
in this regard. (See sub-sections 2.4 and 2.5)

But regardless of the nature of support for
clean tech manufacturing, in some cases, this will fall into the "one-of
category," whereby a unique negotiated
package is conceived by a government
with an outside-of-the-box "avant-garde" private sector firm, for a holistic
agreement tied to a multiple-faceted business investment opportunity. Such was the situation of when the
Government of Ontario negotiated a comprehensive agreement with a consortium
led by Samsung for the production of 1369 MW of wind and solar projects in
return for several clean tech manufacturing plants in that province. Similarly, there is the example of the former
government of NS which brokered a deal with Daewoo Wind for the manufacturing
of wind turbine blades and towers in exchange for government investments in
wind projects in that province. (see
sub-section 5.4)

That said, the basic eligibility criteria should be more or less generic for
green manufacturing facilities, covering both technological and
economic/employment considerations:

Technological
Considerations

The
potential for the reduction of emissions, pollution abatement and/or lower
environmental impact/footprint; and

Technological
innovation advantage, in particular, by comparison with competing products and
international competition;

Economic/Employment
Considerations

The ratio of private to public investment;

Opportunities
and capabilities for broad and rapid market penetration including export
possibilities;

The
development of a domestic supply chain (including relocation support); and

Job creation, andeconomic/regional
diversification.

Finally, delivery of this support could be
through Natural Resources Canada in collaboration with federal regional
development agencies.

3.2:
Optional for Large Industrial Emitters of GHGs Interested in Significantly
Reducing Their Emissions

Canada's largest industrial emitters interested
in significantly reducing their GHGs, could be eligible for one-time 1) 30%
grants or tax credits or 2) loan guarantees, to a) convert some of their energy
intensive industrial processes from fossil fuels to renewable energy sources
and/or b) significantly improve the energy efficiency of industrial processes
and buildings.

Clean energy micro-grids to serve an industrial
building and/or an industrial group of buildings (e.g.: an industrial park)
would be eligible.

____________________________________________________________________

Part 4: Clean Technology Innovation, StrategiesPlus Program and Organizational Structures

4.1
Context -- Generic versus
Technology-Specific Support

It is not the role of
government to choose which clean technologies should be favoured as parts of
the solutions to reduce GHGs, curb pollution, and develop world class Canadian
clean technologies to serve domestic and export markets. It is always best to establish a context for
a multiplicity clean technology solution capabilities/skills/expertise. (see
sub-sections 4.2; 4.3; 4.4; 6.1; 6.2;
11.1 and 11.2), and thus optimize opportunities for innovation/entrepreneurship
and regional inclusion.

This is to say that
the goals associated with the technologies best prevail as generic eligibility criteria, including
emissions reductions, pollution abatement, energy efficiency, market prospects,
potential for Canadian supply chain development, economic feasibility,
potential for employment creation, etc.

Each of the lead clean tech-specific centres
could be part of, or engage, an existing clean tech-specific network sponsored
by Natural Sciences and Engineering Research Council (NSERC), or another
existing clean tech-specific network, as appropriate. But unlike the NSERC centres, the private
public research stakeholders would be active participants in these clean tech
specific centres.

Further on partnerships, each clean tech-specific centre/network that
would have a role getting involved in alliances with additional private and
academic stakeholders and assuring that a significant portion of activities
would be dedicated to small and medium size enterprises and consortiums. As alluded to above, in certain instances, a clean
tech-specific centre or network could entail expansions of mandates of existing
clean tech-specific research centres/networks.

Among the more evident considerations for
national innovation centres centred in the greater Montreal region and reflecting
this region's world class leadership are hubs for 1) a zero emission
vehicle/electric vehicle research; 2) wind technology research with the support
of Technocentre éolien in the Gaspésie 3) waste to energy technologies; and 4)
energy storage.

With respect to item #1, sub-section 6.2, as
well as Annex 1, substantiate the merits of having a ZEV R & D national centre
in the Montreal area, Montreal area being the only area in Canada with a
significant critical mass of electric
vehicle stakeholders and access to nearly 100% clean energy. As for item #2 above, this is merely to
confirm Quebec leadership in this field.

Going one step further, taking a page from the International Solar Alliance
launched by France and India, announced in December 2015 and supported by 120 countries, each clean tech-specific research centre/network
could pursue participation in international research initiatives to 1) attract
investments from various public and private sources, 2) foster common
approaches on R & D, standards and training, 3) enhance technological
performance, 4) reduce the technology and financing costs and 5) support
technological transfers to poorer nations.

On the matter of collaboration with
poorer/developing nations, international alliances of the type described above
could entail commitments for stable funding for research centres in the poorer
nations, as with the case of the International Solar Alliance which will house
its facilities at India’s National Institute of Solar Energy.

Finally, all of the clean-tech specific research
centres/networks would work with the National Clean Technology Integration
Centre for the reasons outlined in sub-section 4.4 which follows.

4.4 National Clean Technology Integration Centre

The key to Canadian
world class clean technology leadership pertains to its capacity to integrate
the various categories of these technologies to complete turn-key green economy
solutions. Accordingly, a national clean
technology integration centre would be established coordinate activities of the
aforementioned research network of clean-tech-specific research centres ( see
sub-section 4.3) and engage in initiatives linking multiple sources of clean
energy with clean transportation, smart grid/energy storage platforms, electric
vehicle bi-directional charging stations, low carbon buildings and other
options supporting optimal technological synergies. This would be done in collaboration with clean energy, clean
transportation and low carbon buildings stakeholders. (see sub-sections 6.1;
6.2; 8.2; 10.4; and 10.5)

Among the models to be
reviewed in the planning of such a centre, special attention would be given to
the US National Renewable Energy Laboratory in Golden Colorado, a 327 acre campus, with
more than 1500 employees, more than 40 countries represented on staff and, most
important, an ambitious program to work with the private and academic sectors
on leading edge innovation initiatives.

Part 5: New Clean Energy Installations and Collaboration with the Provinces and Territories

5.1:
Flexibility to Accommodate National and Provincial/Territorial Targets,
Policies, Programs and Domestic Content

Support for new sources of renewable energy
production sites in collaboration with the provinces/territories, would be consistent
with national and province/territory-specific targets and programs, including
local content and other requirements.

As such, the form of support provided for new
renewable energy production sites would be part of the federal-provincial Climate Council's review of every 2 years to
assure policies are effective for reaching the desired goals (see sub-section
1.3). This consideration is especially important with regarding new clean
energy production sites to properly reflect the rapidly declining technology
costs and a greater abundance of clean energy technologies.

Where there isn't a provincial/territorial program
in place, a joint federal-provincial/territorial agreement on parameters for a
new program would be negotiated.

Two models are presented below for federal
support of new sources of clean energy production with a view of optimizing the
possibilities for what works best under cooperative federalism.

Model 1: The
Feed-in-Tariff, Cost Sharing on Subsidies per Unit of Clean Energy Production

In 2000, Germany introduced a Feed-in-Tariff
(FIT) concept for renewable energy that has since been adopted by about 100 jurisdictions
around the globe, including Ontario under the province's Green Energy Act. As indicated in 5.3, Germany will be
abandoning FIT in favour of a tendering process.

Under the FIT concept, suppliers of renewable energy
-- whether they be renewable energy project developers, community or
cooperative projects and/or individual citizen's rooftop solar installations-- would
be entitled to a premium above market rates per unit of production of energy,
for example per kWh. Also, typically to
complete the business case, this model includes the Right-to-Connect in the
package, meaning that developers, producers and/or managers of the new clean
energy sources are guaranteed access to local markets, specifically access to
the transmission grid network in question.

This concept takes into account that all new
sources of production, whatever the source, cost more than the sources that
have long been paid for, or other sources that went into production many years
before. Thus, while offering incentives
for clean energy development, this concept should not entail additional costs
normally associated with the traditional models for creating new electrical generation capacity.

As well, with the US Congress budget extensions of subsidies
for new wind and solar energy installations through to 2019 and 2021
respectively that
include scheduled incrementally declining levels of financial support, one
could expect the industries concerned to target lowering costs consistent with
scheduled subsidy reductions. To this
effect US support for windpower via the Production Tax Credit (PTC) of 2.3₵/kWh and solar energy projects via the
Investment Tax Credit (ITC) of 30% for solar installations will decline along
the following lines: Wind projects will get 80% of the present PTC if they
enter construction in 2017, 60% in 2018 and 40% in 2019. For solar projects,
the ITC rate will continue through to 2019, then fall to 26% for projects for
which construction begins in 2020 and subsequently 22% in 2021.

Another proviso on applying the FIT/premium
price model concerns linking FIT to energy storage. Such a stipulation would reflect empirical
evidence from the US which suggests certain pre-requisites should be associated
with any federal support. Such
pre-requisites would include 1) smart grid/energy storage technologies are, or
are committed to be, in place to store surplus energy during excess supply
periods and redeploy stored energy, as required and 2) there be no charges to government
sponsors or energy clients for any unused surplus energy.

To do otherwise, risks the perverse effects of
adding costs to both the supporting governments and to consumers for the
production of clean energy that is not consumed. -- Examples include surplus
solar energy produced during mid day or surplus wind energy produced during the
wind velocity peaks at night when energy demand is low -- in the absence of
energy storage technologies.

Model 2: Cost
Sharing for Construction Costs

Certainly cost sharing of construction expenses
has as its attraction being that of a one-time payment for a given project,
thereby simplifying program management requirements. Sub-options within this option include loan
guarantees and cost sharing grants, tax credits and low-interest loans.

For similar reasons to those described in Model
1, 1) energy storage capabilities could be built into project evaluation
criteria to optimize the utilisation of clean energy produced and 2) the levels
of subsidies would need to be reviewed regularly to take into account descending
costs of clean technologies and the influence of scheduled subsidy declines in
the US on the tech costs.

5.3:
The Tendering Process, With and Without FIT
and/or Local Content Requirements

In Quebec, wind energy
projects are the subject of tenders, with 60% Quebec and 30% Eastern Quebec
(Bas-St-Laurent and Gaspésie regions) content
requirements.

In Ontario, prior to a
World Trade Organization ruling, Ontario's FIT tenders integrated local content
stipulations for wind and solar energy projects at 50% and 60% respectively. This gave rise to a significant renewable
energy manufacturing sector in the province.
However, subsequent to the WTO ruling,
Ontario is now going the route of FIT tenders without local content rules.

Evidently it is best that the Government of
Canada remain flexible on a negotiating model for supporting clean energy
production in order to accommodate any province-specific frameworks already in place and/or
preferences.

That said, taking
stock of what Germany is doing on tenders as a replacement for the
Feed-in-Tariff (FIT) model -- with the exception of small projects under 1 MW
-- could be highly instructive for Canada.
Indeed, so much of what Germany does on the green economy is worth
watching given its world leadership, especially because Germany surpassed its
Kyoto 2012 target of a 21% reduction in GHGs with a 23%-24% reduction instead,
relative to 1990 levels. A synopsis of
what Germany is doing by way of revamping its energy transition model can be
found and will be regularly updated in Annex D.

Yet another tendering
model is that under the authority of Brazil's public bank which provides
favourable financing in return for local content. See sub-sections 2.4 and 5.4
for more details.

5.4:
Local Content leading to Local Manufacturing: Taking a Deeper Look

Local content rules is a sub-option that can be
combined with any of the two models described in 5.2, and with or without a
tendering model, as per sub-section 5.3.

This being the case, the parameters of
federal-provincial/territorial agreements to support new clean energy projects could
entail national content requirements of up to 50%, where 1) local content rules already exist
consistent with the provincial/territorial programs or 2) provincial/territorial
governments might wish to set up new criteria in this regard, in collaboration
with the Government of Canada. Both of
these sub-options would be pursued via provincial/territorial regional
development mechanisms exempt from international trade agreements such as the Hydro-Quebec
windpower tenders that are trade agreement exempt.

As well, such initiatives would require a
favourable ratio of private to public investment.

Yet another approach on local content is that of one-time project-specific
agreements. Here the former NDP government
in Nova Scotia presents an interesting example.
In 2011, under a joint venture
agreement between Daewoo/deWind and the provincial government, a wind turbine
tower and blade manufacturing plant was opened in Pictou County, a plant that
would reach 300 employees after 3 years. The province contributed $60M for 51% of the
shares. The Atlantic Canada
Opportunities Agency invested $10M in the project, $5M by way of a repayable
loan and $5M for adjacent land improvements.

Then there is the Ontario government one time model concerning its
agreement with Samsung, Korea Light and Power, CS Wind and Pattern Energy -- outside
of the Ontario Green Energy Act. The
original deal entailed $9.7B for 2500 MW of renewables in exchange for 4
manufacturing plants but was scaled down in 2013 to $6B for 1369 MW. In accordance with the agreement, Siemens set
up a wind turbine blade manufacturing plant in Tillsonburg, Samsung partnered
with Canadian Solar for a manufacturing facility in London and CS Wind set up a
wind turbine tower plant in Windsor.

The aforementioned "one-of" examples
illustrate the advantages of custom-tailored creative arrangements involving an
exchange of benefits for both the public and private sectors. At the same time, there are some generic
considerations to integrate into clean tech manufacturing opportunities that are
best adhered to and described in sub-section 3.1.

A more proactive local content model is Brazil's
60% and 56% local content requirements for wind and solar project proposals respectively
that are solicited under their tendering process, a process for which the
country's public bank, Banco
Nacional de Desenvolvimento Economico e Social, is the tendering authority. As
compensation for local content-related
addtional expenses, the Banco
offers "irresistable" financing at 60-65% below market rates. The
Banco nacional also stipulates that specific key technology components be
manufactured in the country. (see sub-section
2.4)

In keeping with the latter Brazil example,
in Canada, such as indicated in sub-section 2.4, a model to be considered is
that of the Business Development Bank of Canada playing the lead role for new
renewable energy production sites on behalf of the Government of Canada. (see
sub-sections 2.4 and 5.5)

Should other provincial and territorial
jurisdictions be so interested, additional variations of local content rules could be explored, providing that exemption paths from
international trade agreements are identified.

5.5
The Participation of Communities, Cooperatives, Farmers, Individuals and Other
Small Stakeholders

Community clean energy projects not only provide local solutions on
climate change, but also direct energy dollars traditionally exported elsewhere,
to stay within the community for reinvestment and local jobs. (see sub-section
11.2)

Starting with Canadian examples,
among the more interesting models for community engagement on renewable
energy projects is that of La Régie intermunicipale de
l'énergie Gaspésie−Îles-de-la-Madeleine (Régie) in collaboration with Hydro-Quebec in that 1)
the Régie represents 5 Municipalités
régionales de comté (regional governments) for the Gaspésie and the
Îles-de-la-Madeleine plus 37 municipalities representing 96% of the population
in the region and 2) in October 2015, the Régie issued a call for tenders for
its fourth project, a 6 MW wind project,
a first wind project for the Îles-de-la-Madeleine and 3) the Régie, as
co-owners of wind projects, estimates that it's revenues from all their
projects will reach $3.5M/year beginning 2017.

The significance of the Îles-de-la-Madeleine project is that represents
a first step for this island territory to replace diesel-powered electrical
generation with considerably less expensive renewable energy, a first step
representing 30% of the area's electricity needs. For
Hydro-Québec, the project is also a precedent for establishing synergies
between non-renewable and renewable energy sources for a local grid.

With respect to Ontario, it offers a more formalized model with its
MicroFit Feed-in-Tariff program specifically designed to support projects of 10
kW or less in size, for homeowners and others to set up very small renewables
projects on their respective properties.
Under this program, suppliers are guaranteed price over a 20 year term
for all the electricity delivered to the respective local grids. For 2015, the annual MicroFit target for newly
installed renewable energy capacity is 50 MW.

One other Canadian model is that of the previous NDP government of Nova
Scotia, the COMFIT program. This program
was established to specifically support renewables projects that are at least
51% community-owned with eligible stakeholders including municipalities, First
Nations, co-ops, universities and non-profits.
The aim was to drop imported coal based electricity from 75% to
40%. In 2015 coal represented 60% of NS
power production and natural gas and oil another 15%. However, the current
Liberal government in that province
terminated COMFIT in August 2015.

On foreign models for small scale/local development renewables
initiatives, Germany stands tall among nations with 50% of renewable production
under the control of small stakeholders.
However, Germany which invented the Feed-in-Tariff (FIT) concept -- a
concept that has been copied by over 40 jurisdictions around the globe -- is
now in the process of revising its renewables strategy to take into account the
rapidly declining costs of clean energy technologies. Under the revised strategy, FIT will be
dropped and replaced by a tendering system for large utility-scale projects but
some form of FIT will continue to exist for projects under 1 MW.
Accordingly, as indicated in sub-section 5.3, the upcoming revised
German renewables strategy, is worth tracking in this regard. Refer to the outline of developments to-date
on the new German renewables strategy in Annex D .

5.6:
Making Available Government Lands for Clean Energy Production Sites and
Transmission Corridors

Lastly, it is recommended that Natural
Resources Canada, provincial and municipal governments establish new offices to
identify and designate federal lands appropriate for 1) the development of
renewable energy production sites and 2) the inclusion of clean energy
transmission lines. (see sub-section 11.2 on East West grids)

_________________________________________________________________

Part 6: Clean Transportation Innovation, Product Development and Manufacturing

6.1: Clean Transportation Innovation

Establish a
federal-provincial/territorial technology innovation program on clean
transportation with a minimum of $150M/year federal contribution for developing
alternatives including electric vehicles, high performance and high storage
capacity batteries, and smart level 3 (high voltage) bi-directional electric
vehicle supply equipment; hydrogen-powered vehicles and other clean gas
alternatives; and non food-based renewable fuels. The new program would also include research dedicated
to reducing the costs of components for, and/or the manufacturing of, low to
zero emission vehicles.

The new clean transportation innovation program
would replace programs of the previous Government of Canada with a new program
to:

·supporttechnological innovation in partnership with stakeholders thatwould manufacture the technologies, or
refine the renewable fuels, in Canada;

·support the private-public-academic research
partnerships/consortiums including
support for academic and private research centres, as appropriate;

·position the National Clean Technology
Integration Centre (see sub-section 4.4) to become a one-stop-shopping centre for the sharing of information on low and zero
emission vehicle developments, in Canada and around the globe, in particular in
relation to 1) technological linkages to clean energy, low carbon buildings, energy
storage and micro-grids, and where appropriate, 2) dovetailing it's role re
item 1, to encompass facilitating multidisciplinary interprovincial and international partnerships on innovation. (see sub-section
4.2)

As appropriate, priority status would be extended for
the above-described support for cluster
development and a supply chain hub, in collaboration with provincial governments.

For example, the significant
critical mass of the emerging electric
vehicle sector in Quebec could be the object for priority status under a federal-provincial collaboration framework.
(see Annex A on Quebec's electric vehicle sector -- includes 2 battery
manufacturers; 2 charging station manufacturers; a developer of an electric motor wheel; an
electric bus under development; and research facilities)

Such considerations
could be factored in to conditions for government support to maximize business
opportunities for Canadian suppliers when reviewing government investments
options. This applies to other clean
tech sectors as well, whether by way of BDC for investments, by government
research and demo programs and/or manufacturing support initiatives. (see
sub-sections 2.4; 3.1; 4.2; 4.3; and 4.4)

But for now, Quebec's electric vehicle sector presently
remains largely abandoned by both the federal and provincial governments.

For a powerful message
on the possibilities associated with a Canadian the green economy, support for the Quebec electric vehicle
sector,coupled with links to the
Ontario auto industry, could be presented
as an inspirational combined interprovincial
and federal-provincial collaboration model.

Part 7: Vehicle Manufacturers, US Cloning versus
Canadian-specific Requirements to

1) Reduce the Aggregate Fuel Consumption and
GHGs of New Vehicles Sold in Canada

and 2) Accelerate the Introduction of Low and Zero
Emission Vehicles in Canada

7.1:
Corporate Average Fuel Economy (CAFE),
the US "Loopholes" and
Canadian Opportunities

Canada emulates the US on the application of
corporate average fuel economy (CAFE) standards or the annual targets for the aggregate fuel consumption of vehicles sold
by a vehicle manufacturer in a given year. (sales-weighted average
consumption). These standards become incrementally more stringent
over a given period

In May 2009, the Obama
administration announced a new National Program -- a complex US government engagement with the
auto manufacturers and other key stakeholders, backed by 300 pages of complex legislation
and 1500 pages of related documents. -- The announcement pertained to a new approach
for calculating a manufacturer's CAFE for
the model years from 2011 to 2016, with a CAFE target of 6.6 litres/100km for
2016.

The Canadian reasoning for the cloning of US
targets and policies on vehicle fuel consumption has always been that the North
American market is an integrated market leaving no room for Canada to adopt any differences in its approach.

This is faulty reasoning because 1) most
manufacturers' sales mix of models in Canada are different than those in the
US; 2) as a result of item # 1, Canada has plenty of wiggle room for more
demanding targets than the US; and 3) the
aforementioned highly complex US legislation and government agreements with the
auto makers provide each vehicle manufacturer with considerable scope for non-compliance
with the overall US CAFE/fuel consumption/GHG reduction targets for a
particular model year . Regarding item 3, the US legislation allows for a
manufacturer to make up for a CAFE year-specific setback(s) with better averages
in subsequent years, (see sub-section 7.2) -- to perform better than the CAFE targets for
those subsequent years.

These "loopholes" in the US
legislation are considerable and
Canada-specific modifications are essential
if Canada wants legislation that is effective in reducing GHGs from the
transportation sector and a meaningful incremental shift to low and zero
emission vehicles.

The following sub-section describes these
loopholes in more detail and proposes corrective measures for Canada.

7.2: The 300 Page US Legislation:
Not a Model for Canada

The aforementioned highly complex 300 page law and
associated agreements, place the CAFE
emphasis on fuel consumption targets for each footprint category of vehicles. Footprints are based on multiplying the
wheelbase length, by the width between the wheels, to produce a footprint
expressed in US square feet (or square metres in Canada).

The problem with the system introduced in 2011
is such that, in the event a manufacturer's sales are heavily weighted to
favour the large and high energy consumption categories, the manufacturer's overall
CAFE target -- the average fuel consumption based on all vehicles sold
by a manufacturer -- would be adjusted to be that of a higher average
fuel consumption permitted by law for the model year in question. In other words, the more a manufacture's sales
are weighted in favour of the high consumption vehicles, the less stringent
would be the overall model year-specific CAFE target with which the
manufacturer would have to comply -- an incentive for producing more large high
consuming vehicles! This is referred to
an August 2012 EPA Regulatory Announcement as "compliance flexibility."

With cloned from the US "compliance
flexibility" in Canada, manufacturers, there is the risk that
manufacturers resort to dumping high consuming vehicles in Canada to
"adjust" to US CAFE targets.

7.3:
Canada has Plenty of Wiggle Room For more Stringent Standards/Targets than the
US

Without engendering any undue burden on the
North American auto industry, there is considerable scope for the modification
of the Canadian 2017 to 2025 vehicle fuel
consumption framework with simpler and
more effective legislation to assure greater priority in Canada for vehicles
with low fuel consumption/emissions and zero emission vehicles.

This can be accomplished by modifying the
regulations of legislation on CAFE standards for new vehicles to:

Return to
the simpler -- prior to 2011 - CAFE model, a concept based on aggregate fuel consumption related
to the total sales of a given manufacturer for a given year, thus abandoning
the footprint (vehicle category) targets;

Be more
stringent than, and independent of, those of the US, and

Include
requirements for each manufacturer to achieve minimum percentages of total
annual Canadian new vehicle sales that must be zero and low (eg.:plug-in
hybrid) emission vehicles, beginning in year 2018, and incrementally becoming more
demanding through to 2025.

The vehicle
manufacturers would be able to comply with the above-described stipulations by
adjusting the distribution of models each manufacturer places on the Canadian
market -- different than the distribution of models placed on the US market. (Note, every manufacturer has differences in
the line up of models in the US versus what is offered in Canada, and as noted in
sub-section 7.1, the mix of models sold has always been considerably different
in Canada compared to the US.)

And by bringing back the "old CAFE
model" reflecting the aggregate fuel consumption of all vehicles sold by a manufacturer, the Government of Canada would
pre-empt scenarios whereby the manufacturers would exploit US and Canadian
"compliance flexibility" to dump high consumption vehicles in Canada that
cannot be sold in the US. -- Moreover, the complexity of the 300 page US legislation offers a great way to obscure what
constitutes compliance.

To achieve acceptable
economies of scale and the political clout necessary for the requirements on
percentages of zero and low (plug-in hybrid) emission vehicles sales in Canada,
Canada would adopt the state of California requirements in this regard, requirements
that are mandatory in 7 other states, namely Connecticut, Maryland,
Massachusetts, New York, Oregon, Rhode Island, and Vermont. (Note, the US CAFE legislation allows for
zero and low emission vehicles to count for more than one vehicle in a
manufacturer's compliance calculation, but the initiative of the US states
referred to above, provides a more trustworthy approach for reaching the sales
volume goals for these types of vehicles on the road.)

As well, by dispensing with the US clone policies, Canada would be
guided by considerations as to what targets are within the realm of the
possible. For example, the current
Canadian --identical to US -- average emissions/vehicle CO2 target is 93 grams
by 2025, while the EU target is 95 grams for 2020. Evidently, if the EU can do better than the
US, Canada can do so too!

7.4:
Canadian Fuel Consumption Data

Beginning with the
model year 2015, Natural Resources Canada introduced new fuel consumption
testing methods that are more consistent with 1) what drivers can expect on the
road and 2) US Environmental Protection Agency (EPA) data for the same and
similar vehicles. (Prior to 2015, the
Canadian fuel economy data was considerably better or exaggerated when compared
with EPA data, vehicle-by-vehicle.)

But despite the improvements
in the reliability of the Canadian fuel consumption numbers, the Canadian glass
remains half full.

On similarities, or
the glass being half full, in both the US and Canada, the fuel consumption data
is supplied by the respective manufacturers.
However, for the other half of the glass, unlike the US market for which
the US government does random testing of 15% of the vehicles on the market to keep
the manufacturers honest, there is no random testing in Canada. In conjunction with random testing, the EPA tracks on the road fuel
consumption by consumers
to identify anomalies.

In light of the fact
that there are important discrepancies for certain vehicles when the EPA and Canadian
data are compared, the Government of Canada should reserve the right to do its
own testing in the event of 1) significant differences between US and Canadian
data, 2) sizable numbers of consumer complaints and/or 3) other grounds for
questioning manufacturer-supplied data.

7.5:
Corporate Average Fuel Economy and Emissions Trading System Among Manufacturers

Since 1) the EPA
approach is consistent with overall targets to reduce GHGs in the vehicles
sector and 2) cap and trade principles penalize those that miss the mark and reward
those companies which do better than the prescribed target (CAFE) for the year
in question, the EPA model on exchanging carbon credits is a sensible for
Canada as well. This is a particularly
worthy approach should Canada implement more stringent CAFE standards than
those of the US, along with percentage sales targets for low to zero emission
vehicles sold in Canada, beginning in 2018.

Accordingly, Canada could
establish a motor vehicle manufacturer emissions cap and trade credit system to
complement the new vehicle measures described in the preceding sub-section 7.3. This emissions trading system would allow vehicle manufacturers to
exchangeCanadian credits exclusively
within Canada among vehicle manufacturers operating in Canada.

Part 8: New Vehicles, Consumer and Private Sector Choices plus Government Procurement

8.1: Encourage the Purchase of Vehicles with Low
to Zero Emissions

In 2008, France introduced a bonus-malus revenue neutral scheme
for new car sales to
the effect that those who purchased the low and zero emission vehicles would
get a rebate of €1000 ($1420 CDN), while
those who purchased high CO2 emission vehicles would be subject to a surcharge
of €2600 ($3688 CDN). This system was
found to be very effective, but since then the range and types of increments
have changed.

In reviewing the merits of the bonus-malus
system in France and its applicability to Canada, the Government of Canada may
wish to consider two models. One would
be a bonus-surcharge system along the lines of France's model without any
changes to the federal new vehicles sales tax schemes, while the other would
build in the bonuses and penalties into the sales tax on vehicles.

However the disadvantage of integrating
differentiation in the sales tax rates based on vehicle type is as
follows. The range of the difference
between a bonus (negative tax/rebate) on a fuel efficient vehicle versus a high
sales tax rate on a high consuming expensive vehicle risks 1) being
insufficient to significantly influence consumer choices of models and 2) not
having any impact on the market for luxury vehicles.

An interesting variation of the above formulae would
be that loans from government whereby the zero emission vehicle owners would pay
their loans with their savings on fuel, much like previous home retrofit programs.
India is reviewing this option regarding
a scenario of 100% electric vehicles by 2030.

Complementary options for consideration include:

·A more significant
bonus/rebate for zero emission vehicles and hybrids for low income or all
buyers;

·Federal-provincial-municipal collaboration on building codes, where applicable, on wiring and service panels to be in place to
accommodate electric vehicle charging stations in new private and public
buildings and parking lots (see sub-section 10.4);

8.2:
Clean Transportation, Government Procurement and Leadership by Example

The Government of Canada can position itself to
be both an innovation leader, and set an example for all, by establishing a
federal government fleet procurement program that sets clean transportation targets. These targets would be defined in terms of 1)
the percentage of vehicle purchases that are low to zero emissions/low to zero fuel
consumption vehicles beginning 2017 and 2) a government-wide and government
organization-specific corporate/fleet average fuel economy standards for new
vehicle purchases for each year beginning 2017.
The CAFE standards for new vehicle purchases could either be equivalent
to the CAFE standards that apply to the Canadian market at-large or be more
stringent than the requirements for the auto makers outlined in sub-section
7.2. More stringent requirements for the
government vehicle procurement, however, would send a stronger signal to
Canadian consumers and the private sector.

Backing up the clean
transportation procurement action plan, appropriate charging infrastructures
for government vehicles would be put in place to meet the requirements for zero
emission and plug-in hybrid vehicles. In
selected instances these charging stations would be accessible to the public.

Additional procurement-related support for the
clean transportation industry in Canada could be extended to government
participation in vehicle innovation demonstration projects, as per sub-sections
6.2; and 10.5.

Where appropriate, the above-mentioned demo
projects could be part of holistic approaches combining clean energy
integration, low carbon or net zero emission building, clean transportation
vehicles and infrastructure, in collaboration with the support of The National
Clean Technology Integration Centre.
(see sub-sections 4.4; 6.2; 10.3; 10.4 and 10.5)

There are an extraordinary array of complementary Zero Emissions
Vehicle (ZEV) programs and policies in California and China. Point
form descriptions of the evolving models in California and China can be found
in Annexes B and C respectively.

9.1:
Getting Started: Developing the Partnerships for a Consortium of Investors and
Suppliers

We all know what intercity passenger rail could
be like. Most Canadians are very
familiar with the impressive European model.
In Europe, the high speed
intercity rail service not only provides a more convenient, less tiring and
less energy demanding alternative to the
automobile for medium distances between communities, it is also competitive
with the high energy consuming air travel mode for distances of 500km to
1000km.

We also know that the Canadian company
Bombardier has participated in high-speed rail projects in Europe and China and
that company recently sold shares of its land transportation division in order
to finance investments required for the Bombardier C Series aircraft.

Finally, it is a given, that without dedicated
tracks for high passenger speed rail in this country, high speed rail cannot happen
in Canada.

Taking into account the three above-mentioned
considerations, the Government of Canada could choose to explore working with
the CPP Investment Board, the Caisse de dépôt et placement du Québec, private
pension plans and investment organizations, public and private research institutions,
private suppliers and/or provincial governments, to establish a consortium on
high speed rail in Canada, to set the stage for a 21st Century version of a
national dream.

9.2:
Being Realistic, a Phased Approach to Pursuing a Bold New National Dream

Being realistic, that is, recognizing that we
are more than a half century behind our international competitors, the start-up
process will be lengthy and costly.

As a result, it is recommended that pursuing
the national dream begin with tenders with two distinct steps:

·The first phase
would be that of developing Made in Canada prototypes regarding a high speed passenger rail train model and the infrastructure necessary to support such a train.

·The second phase would pertain to the manufacturing of train locomotives and wagons, the
installation dedicated passenger rail tracks and new construction/modifications
for train stations, for two to three high speed demonstration projects, among the
most heavily traveled intercity corridors in Canada.

With regard to the choice corridors, factors
like potential passenger volumes and provincial government and private sector
participation, the interests of municipalities in intermodal connections
between rail and local public transit, etc.
could be among the considerations for selecting the best candidates.

10.1:
From the Successful Canadian History regarding Building Audits and Retrofits To
Today's Pressing Challenges for GHG Reductions Involving Multiple Sectors

Past Canadian free home energy audit programs,
coupled with government support for energy efficiency improvements stemming
from opportunities identified via these audits, have been reasonably
successful. In certain areas of the
country, the federal programs were combined with provincial ones.

But now, with the challenges of climate change being
more pressing, together with the fact that Canada has much to do to catch up
with its competitors, not only with respect to greenhouse gas reductions, but
also by way of making great strides forward on green jobs and clean
technologies, the efforts required are greater than they were during the eras
of past programs.

10.2:
Federal-Provincial/Territorial Collaboration

Capitalizing on past successful energy programs
for buildings and extending them to make links with clean energy and clean
transportation, the Government of Canada would enter into discussions with the
provinces and territories on initiatives for existing and new buildings in the
residential and commercial sectors. Based on the respective provincial/territorial
interests, policy objectives and ability
to pay, the Government of Canada would seek
agreements around the following themes and options.

Eligible projects would include packages for a
group of buildings or households such as a group of industrial park buildings and a group of
condominium buildings.

An additional option on financing could be government
sponsored or approved third party leasing arrangements that could be the object
of combinations of federal-provincial-utility-private sector agreements, as per
provincial preferences, with an opting out formula for provinces that propose
to achieve the same aims with different measures.

A further variation of the above-described
potential components of an existing buildings program would be to include the
Business Development Bank of Canada and Natural Resources Canada as the federal
members of the federal-provincial/territorial financing partners responsible
for program funding at the macro level and/or management at the
project-specific level. (see sub-section
2.4)

10.4:
New Residential and Commercial Buildings and Federal-Provincial/Territorial
Collaboration

New buildings would be the object of federal-provincial/territorial
discussions to reach a consensus on national and provincial/territorial
building codes and financial support concerning energy efficiency, clean energy
integration and micro-grids, clean transportation infrastructure, energy
storage, water heating, heat pump, insulation, lighting and other
considerations related to minimizing the environmental footprints of new
buildings. Clean transportation support
infrastructure could include new conduits to carry electric wiring and upgrades
to service panels to accommodate the power requirements for charging stations.

With the above considerations in mind and with California's buildings energy use
reduction targets as a point of departure,
national and provincial/territorial building codes would be updated with
targets to the effect that all new buildings be zero net energy buildings
beginning 2020 for residences and 2030 for commercial buildings, in provinces
and territories where 70% or less of grid capacity is sourced from
renewables.

A particular priority of the
federal-provincial/territorial discussions would be that of supporting Canada's
global leadership in buildings certified as Leadership in Environmental and
Energy Design, or LEED.

This being the case, the building code updates
could be combined with LEED building targets,
as a percentage of total new buildings space.

On Government of Canada support to assure that 1)
energy efficiency, clean energy integration, zero net energy buildings, LEED etc.
targets are met and 2) the Canadian eco-building industry sector flourishes in
foreign as well as domestic markets, it could take the form of involving one or
more of the following federal organizations by way of financial assistance, CMHC, BDC and/or EDC, to leverage private
sector investments on a project-by-project basis. (see sub-sections 2.4; and 2.5)

Regarding
government assistance for buildings-related innovation research projects
and demonstrations, these activities would be included as eligible for support
under the generic clean technology
innovation program(s) as per the description in sub-section 4.2.

With respect to in-kind government cooperation on
research projects, the National Clean Technology Integration Centre and select
facilities of the National Network of Clean Technology Research Centres would
partner with building project stakeholders, as appropriate. (see sub-sections 4.3; and 4.4)

More generally speaking, while a project may be
eligible for two or more of the aforementioned types of support, the total
value of public sector financial and in-kind support should not exceed one third of a given project's
cost.

10.5: New and Existing Government and Government-Financed
Buildings: Supported by
Federal/Provincial/Territorial and/or Municipal Governments

Policies would be established for all new
government buildings as well as new buildings funded by the federal provincial
and/or municipal governments, such as public housing. These policies would be intended to assure
consistency with the targets of the various levels of government, building codes, LEED objectives etc. for the non-government commercial
and residential sectors, as per sub-section 10.4, and optimize:

·support
for green economy demonstrations/innovations with possibilities for 1) co-funding
under sustainable development, clean energy, clean transportation innovation and government
procurement programs, plus 2) the participation of the National Clean
Technology Integration Centre and select facilities of the National Network of
Clean Technology Research Centres, as appropriate, as per sub-sections 4.2;
4.3; 4.4; 6.2; 8.2; and 10.4 respectively of these guidelines on a green
economy.

For all existing government buildings, regardless of the level of government, internal
energy audit programs would be set up to determine the potential concerning the
first two items above and associated the payback periods. Subsequently existing government buildings would
be priorized according to the potentials for reducing their respective
environmental footprints, as per government
funds available.

As well, clean transportation infrastructure
for existing government buildings would be a priority.

____________________________________________________

Part 11: Green Infrastructure, the Vision and the Scope

11.1:
Setting Macro Priorities and Frameworks for Agreements with the Provinces and
Territories

As alluded to in sub-section 1.1, with infrastructure
being one of the largest budget items of the current Government of Canada, it is
critical that infrastructure priorities take into account that 1) the clean
tech sectors are among the largest growth and job creation sectors in the world
-- with green economy returns on government investments for job creation being
6 to 8 times greater than similar investments in the traditional
resource-economy; 2) the market for
green solutions will continue to grow rapidly as a result of increasingly
aggressive climate policies among Canada's competitors and the declining costs
of clean technologies; 3) infrastructure investments which lead to increased
dependency on personal vehicles are to be avoided; and 4) increasingly
intensifying climate policies of the world's largest energy consuming nations
are engendering a plateau/decline among the fossil fuel sectors.

Clearly all of the above considerations imply that if the current government is serious
about climate change, the goal should be that of reversing the current ratio of
infrastructure investments in the old economy measured against that of the new
green economy. Such orientations
could be a starting point for discussions with the provinces and territories,
municipal, private and other stakeholders.

Projects in the green
infrastructure category could include, but not be limited to, the following:

·Substantive
public transit investments consistent with needs of provincial and local
governments and new opportunities, not only for subway and light rapid rail system
expansions, but also for the introduction and development of Made in Canada
electric buses for medium to large communities across Canada; (see sub-sections
4.2; 4.3; 4.4; 6.1; 6.2 and 11.1);

§The creation of greater metropolitan and
regional hubs, much like the auto sector hub in Southern Ontario and the aerospace
hub in the Montreal area, plus clean tech industrial parks and other creative/innovative
hub models; and

§A variation of the preceding point by way of holistic
hubs of multi-disciplinary eco-systems of complementary sets of stakeholders that
could involve major manufacturers; small and medium size supply chain firms;
innovation/R&D private and public organizations; technology integrators, including the National Clean Technology Integration Centre and others that can
address the challenges associated with multiple sources of clean energy a) feeding
a transmission grid and b) linked to low carbon buildings and clean
transportation; developers and financial institutions; and additional stakeholders that could
contribute to turn-key solutions; and

·Low-cost
building space for green economy incubators, which would allow green technology
innovators to lay the foundations for new enterprises with minimal start-up
costs, share common services and participate in the cross-fertilization of
technological solutions.

For the NS project, there will be local
manufacturing of some components that will have gravity-based foundations
assembled at, or near, dockside.

The Nfld project will also use gravity-based
structures with foundations manufactured in Corner Brook. For this project, Beothuk will make use of
the existing workforce with experience in large structures for the oil industry
and create 600 new jobs, many of which would be high paying construction. Additional jobs will be in the fields of
monitoring, operation and maintenance.
Potential buyers for electricity would include Atlantic Canada and
Northeastern US stakeholders.

Located near the proposed Nfld offshore wind
site, there is the existing subsea 500 MW Maritime Transmission Link that
connects Nfld to Cape Breton, NS, from where terrestrial transmission lines in New Brunswick reach into
Maine.

In short, Canada is poised to a significant player
in offshore wind, which, in turn, will support economic development in Nova
Scotia and Newfoundland. But since the
Canadian potential for viable offshore wind projects includes 1) two coasts and
2) large waterways between these two coasts, the scope for Canadian
participation in offshore wind could be considerable.

Manufacturing, docking and shipbuilding (for installation
vessels) facilities in Ontario, Quebec and Nova Scotia could become key elements
for the Canadian offshore wind supply chain and dockside launching requirements. And from such a base, there lies the
potential for Canadian offshore wind stakeholders to enter into global export
markets.

At the same time, it is important to recognize
European and Chinese leadership in offshore wind as a backdrop for the
challenges for Canada catching up and joining global leaders.

12.2:
The Global Leadership of Europe and China

In 2015, the 28 leaders of the European Union
signed on for a agreement that would result in offshore wind energy production coming to the Old Continent
via sea cables to achieve a minimum target of 10% of total EU electrical
generation by 2020 and 15% by 2030. All
told, there exists a EU potential for a super-grid drawing from the North Sea
offshore wind farms to transport up to 65 GW by 2030, or 25% of Europe's electricity
needs.

Among the plans for
sea cable links connecting offshore wind farms to the Old Continent are 1) the
$1.65B (USD) 1.4 GW 950km North Sea Network to link Norway and the UK and which
will be operational in 2021; 2) the 1.4 GW NordLink between Germany and Norway;
3) the Viking Line between Denmark and the UK; and 4) the Nemo Link between the
UK and Belgium. These links are in
addition to the existing interconnectors, 1) the 1 GW BritNed line between the
Netherlands and the UK; 2) the NorNed
700 MW line connecting Norway and the Netherlands; and 3) the 2 GW IFA line
connecting the UK and France.

The 630 MW London Array in the outer
Thames Estuary, commissioned in 2013, is currently the world's largest offshore
wind farm and the Caisse de dépôt et placement du Québec, which manages
Québec's pension funds, has 25% of the shares in the entity. But the
London Array will soon lose it's largest offshore wind farm title to the first
wind farm to exceed 1 GW, the 1.2 GW Hornsea wind farm off
the Yorkshire Coast,
which will power 1 million homes.

Employment in the UK offshore sector stood at 18,000
jobs in 2015 and the projection is for 30,000 jobs by 2020.

On par with the UK, the projections are that China will also
reach 10 GW of
installed offshore wind capacity by 2020, with roughly 1 GW and 1.2 GW to be
installed in 2016 and 2017 respectively.
Much of the technologies to be furnished by China's domestic
manufacturers such as Goldwind , Ming Yang Envision and Dongfang.

Lastly, marine
renewable energy turbines placed underwater may offer additional scope for
offshore clean energy. However, these technologies
are still in their infancy and much research needs to be done before these technologies
are cost effective to serve a significant portion of the clean energy market.

12.3:
The Creation of an Offshore Clean Energy Agency: The Rationale and the Mandate

To avoid the pitfalls
associated with multiple provincial, interprovincial and international considerations
and the incredible numbers of types of stakeholders that might have an interest
in offshore clean energy development and its impacts -- from the private, academic,
fishing and tourism sectors -- it may be best consider the US Bureau of Ocean
Energy Management model of having a one-stop-shopping Offshore Clean Energy
Agency to coordinate and plan projects in collaboration with the provinces and the
vast array of stakeholders.

To this end, the Agency would:

·In
collaboration with the provinces and the Dept. ofFisheries and Oceans, as
appropriate, identify good wind and marine energy production areas that 1) do
not conflict with marine life or community interests and 2) fall outside marine
protected areas, (see sub-section 13.1);

·In
collaboration with the provinces and Natural Resources Canada, oversee leasing
and permitting via its coastal offices to assure one-stop-shopping services for
stakeholders in areas identified for development;

·Offer
financial support for the final project planning stages, including the planning
of offshore transmission links, much like the UK Crown Estate (the owner of the
UK seabed);

·Offer services in the capacity of being a
facilitator or a partner -- related to the Agency's planning support -- for
offshore clean energy initiatives that target:

§ BDC and
EDC venture capital and export support respectively, as per sub-sections 2.4 and 2.5;

§federal regional development
agencies -- particularly regarding their expanded
clean technology mandate and role in economic diversification, combined with their
foci on coastal industries such as the shipbuilding and port services
sectors -- for the purposes of assuring solid industrial bases for offshore
wind and other marine renewable energy technologies; and

·Collaborate
with coastal countries with advanced offshore clean energy development such as
Germany, the UK and China.

13.1:
Marine Protected Areas: Establishing a Bases for New Policies on Protecting the
Marine Environment

To make up for lost time, the Government of
Canada would in its first year authorize a clear mandate to the Dept. of
Fisheries and Oceans (DFO) to establish marine protected areas in collaboration
with the Offshore Clean Energy Agency -(see sub-section 12.3) - along the lines
of national parks. These protected areas
would be safe havens for marine life to regenerate.

To support
the enhanced mandates, DFO research centres would be re-habilitated to reach
their pre-Harper reign strengths and capabilities.

More
precisely, the DFO research centres would
be assigned high priority tasks to monitor the protected areas with a view of
formulating new policies on protecting marine habitats and marine life in
general.

13.2:
Updating Marine Legislation

At the request of the
pipeline industry, under the Navigable Waters Protection Act, the Conservative
government eliminated requirements for environmental impacts analyses regarding
projects involving new infrastructures/obstacles in waterways such as bridges
and pipelines.

In a similar vein, the
former Conservative government gutted the Fisheries Act to the effect that the
Act only protects the marine habitats of commercial and First Nations
fish. Since multiple species of marine
life share any given marine habitat, this legislation is now inapplicable.

As well, there is a
need to update the Canada Shipping Act -- under Transport Canada's authority --
to reflect the rapidly growing phenomena
of motorized high powered pleasure craft on Canada's smaller lakes and rivers,
as well as other types of personal motor boats, that significantly exceed the
environmental tolerances of the majority of Canada's waterways. Examples to this effect include 1) motor
boats equipped with wave amplifiers and motors of up to 550HP and 2) jet
propulsion boats on shallow salmon rivers.

The Canada Shipping Act requires updating because
1) it is primarily about safety and navigators' rights, 2) environmental issues
are very rarely considered under the Act, and 3) Transport Canada encourages
non-regulatory community-specific solutions concerning motor boats, in the form
of voluntary codes of conduct.

The Transport Canada directives favouring voluntary
codes of conduct have, in the vast majority of communities, produced
non-resolvable debates from coast-to-coast. The result is such that the
owners of the problematic boats reap the advantages of either a lowest common
denominator consensus or an absence of a consensus allowing them to continue
their practices by default, in absence of environmental considerations.

____________________________________________________________________

Part 14: Other Related Challenges

14.1:
Canadian Environmental Bill of Rights

During the Fortieth Parliament, Linda Duncan
submitted a Private Members Bill, C-469, an Act to Establish a Canadian
Environmental Bill of Rights. Seizing
the opportunity associated with model already developed, the Government of
Canada would finish what was already started, by way of re-introducing the Canadian
Environmental Bill of Rights for adoption at the earliest possible date.

To complete the portrait of putting citizens
and environmental organizations in the driver's seat to contest actions of the
private sector and the various levels of government that are contrary to
environmental interests, the Bill could be accompanied with support under the
Court Challenges Program for the court and legal expenses of citizens and
not-for profit organizations, as per new eligibility criteria in this regard.

In this way, the Government of Canada would
offer Canadians participatory democracy such that one would no longer have to depend
on, serendipitous just-in-time surveillance of government legislative enforcers
and/or new legislation, to address unforeseen threats to the environment.

14.2:
Packaging

Introduce product packaging legislation that
gives manufacturers, distributors, importers and retailers up to 2 years to
introduce 100%, or near 100%, recyclable packaging materials and include in the
legislation, the responsibilities of manufacturers, distributors, importers and retailers regarding
optimization of the amount of packaging material that gets recycled.

14.3:
Banning Plastic Microbeads: Following
the Lead of the US and California Governments

The Canadian Parliament has already approved a
motion in this regard. With the US and
California legislation in place, Canada must now act quickly if it is not to
become a dumping ground for what cannot be used in the US.

The order of magnitude of the problem is enormous
as exemplified by the fact that 2.9T microbeads enter US waterways annually.
The related topic concerning plastic bags at-large follows in sub-section 14.4
and provides some additional statistical background information.

And of course, discarded plastics contribute more
to terrestrial pollution than marine pollution.

Accordingly, the City
of Montreal should be congratulated for its February 2016 announcement on the banning of single use plastic bags,
beginning July 1, 2018. Nevertheless, one should also take notice of the
leadership of the State of California which has adopted measures that go beyond
a ban on single use plastic bags.

On California's action
on plastics, in September 2014, The California Senate approved a phased
approach for a state-wide ban on single use plastic bags encompassing the
elimination of single use plastic bags in grocery stores and pharmacies
beginning July 2015; and a similar ban for convenience stores in 2016.

Concurrently, the
legislation called for a mandatory 10 cents minimum charge for recycled paper
and reusable and compostable bags.

Annex D: The Revamping of the German Renewable
Energy Act, A Work in Progress

Once again Germany
is breaking new ground with a tendering
process which will be designed to replace it's FIT program and better reflect
the rapidly declining costs of renewables technologies. In this regard, a reform of the German
Renewable Energy Act will be ready in 2016, with full implementation to begin
in 2017.

In the interim,
Germany is experimenting with pilot tenders for solar and wind projects whereby
the government sets a ceiling for the total number of megawatts to be approved
for any given round of solar or wind tenders.
This system favours the cheapest proposals to win until the overall capacity
limit is attained for the tender round in question.

However, the German government has recognized that this model should not
be applied across the board to include small installations since doing so would
rule out projects from small communities, co-operatives, farmers, individuals
and others. This is significant because
the stunning success of the German FIT model is in part attributable to the
fact that 50% of renewable energy production capacity in Germany is owned by
such groups. The attraction has been
guaranteed the high Feed-in-Tariff prices and priority access to the grid to
sell their surpluses. For rural
communities in particular, the old formula meant new local jobs and an increase
in tax revenues. http://energytransition.de/2012/10/key-findings/

To address these
matters, Germany plans to exempt projects, such as rooftop solar initiatives,
that are 1 megawatt or less.

Other matters that the
German government must consider is that the proposed tender model, as
formulated thus far, has the potential to limit the number of stakeholders who
are capable of participating. Only those
with sufficient financial strength can afford to invest in an expensive bidding
process for which they might not be among the winners. The German Green Party worries that the result
may translate into higher costs and tendering round-specific ceilings not being
met.